What is the Michigan No-Fault Act?
Written by: Thomas M.
The No-Fault Automobile Insurance Act attempts to make it
easier for a person injured while owning, operating,
maintaining, or using a motor vehicle to obtain medical
treatment, recover wage loss and the cost of home care among
other economic losses
WHAT ARE YOUR DUTIES?
If you are the owner or registrant
of a vehicle in Michigan, you must purchase an auto
insurance policy which provides for the minimum coverage’s
listed below: •Personal Protection Insurance (PIP). These
benefits provide coverage for “accidental bodily injury”
arising out of use of a motor vehicle. •Property Protection
Insurance This provides coverage for damage you cause to
another person’s property while using your motor vehicle.
•Residual Liability Insurance This provides coverage for
both out-of-state accidents and suits brought against you as
a result of your use of a motor vehicle. Failure to satisfy
these requirements can result in criminal sanctions. For a
claim to fall under the No-Fault Act, an accident must
involve at least one motor vehicle. Thus, an accident
between a car and another car or between a car and a
pedestrian would be covered, but an accident between a
motorcycle and a pedestrian would not by covered under the
WHO IS COVERED?
There are several categories of
individuals who are covered by the protection of the
No-Fault Act. These individuals can be separated into five
groups: •Persons named in the insurance policy •Spouses of
persons named in the policy •Relatives of either the
policyholder or his/her spouse who live in the same
household. •Operators and passengers of the vehicle involved
in an accident. •Employees of the owner or registrant of the
motor vehicle and their spouses and relatives who live in
the same household.
WHAT IS COVERED?
•Medical Expenses. These expenses
must be reasonable and necessary for the injured party’s
recovery. Your Insurance Company must pay for these expenses
for as long as treatment is necessary. •Wage Loss. If an
individual is not able to work, then for the three year
period following the accident, the injured person is
entitled to the lesser of 85% of her monthly wage loss or
$4,929.00 per month, as of January 2011. •Replacement
Services. If an individual must pay another person to
perform domestic services, child care etc., the no-fault
insurance policy must provide for reimbursement of up to
$20.00 per day to the injured party for the three year
period following the accident. •Rehabilitation Expenses.
HOW DO I GET MY WAGE LOSS AND MEDICAL BILLS PAID?
You must fill out an Application
for No-Fault Benefits Form (Benefits Form). It is obtained
from the automobile insurance company responsible for paying
your First Party Benefits. This Benefit Form has 3 places
for you to sign, two on the bottom front and one on the
back. Many people forget to sign the back page and it holds
up payment of their benefits. It is important to fill out
this piece of paper accurately for it may be obtained and
used against you by the at-fault driver's insurance company
to discredit you as to your version of the accident and the
injuries you are claiming. Many people do not give an all
encompassing list of everything that hurts them. As a
result, some may argue that you are claiming a "new injury"
that is not listed.
HOW MUCH OF MY WAGES WILL THEY PAY?
You are entitled to 85% of your
wage loss. The 15% difference is for taxes. If you can show
you were in a lower tax bracket then 15%, you could be paid
a higher amount. There is a maximum monthly wage loss amount
the insurance company is responsible for paying. It goes up
a little bit each year to compensate for inflation. As of
2011, the maximum wage loss available per month from an
automobile insurance company was $4,929.00. Typically, this
amount increases by $60.00 to $100.00 each year. If you are
earning more than the monthly wage amount, the difference
between the Maximum Monthly amount and 85% of the actual
amount that you earn per month, may be obtained and claimed
in your Third Party Claim against the negligent driver/owner
of the other vehicle involved. If you are Temporarily
Unemployed, such as a school teacher not working during the
summer or recently out of work but actively seeking
employment you may be entitled to receive work loss
WHAT IF THE ACCIDENT INVOLVED A DEATH?
The applicable auto insurance
company is liable for certain benefits to the surviving
dependents of the deceased. There are two types of
Survivor's loss benefits. The first, replaces "contributions
of tangible things of economic value." This has been held by
courts to cover more than just wage or salary income. The
second covers replacement services. There are many factors
to consider, but this generally means potentially receiving:
1. Replacement services $600 a month for 3 years; 2. Up to
the Maximum Wage Loss Amount per month for 3 years; The
monthly combined maximum for BOTH cannot exceed the Maximum
Wage Loss Amount.
A FINAL NOTE
This pamphlet is designed to give a
brief description of the No-Fault Insurance Act. It would be
a mistake to rely solely on this source as a means of
answering all of your questions about the No-Fault law.
Because the law is constantly changing, the issues that seem
clear in this presentation are actually quite ambiguous in
their application. The sad fact is that the No-Fault system,
although designed to curb litigation, has led to a great
many lawsuits. The Act has left many questions unanswered
and its terms are open to a variety of interpretations. As a
result, if you are injured in an automobile accident, it is
important that you understand your specific rights under the
Act. If you are injured or you simply have questions about
the law, you should seek information from the source with
the most accurate answers, an attorney. THOMAS M. DeAGOSTINO,
Esq. (248) 377-1700.